US debt ceiling talks turn to work requirements for benefits programs

By Jarrett Renshaw and David Morgan

WASHINGTON (Reuters) -Democratic President Joe Biden and top congressional Republican Kevin McCarthy are expected to discuss new work requirements for benefits programs for low-income Americans during Tuesday’s debt ceiling negotiations, sources familiar with the talks said.

Biden and McCarthy’s aides discussed the requirements for two key programs that provide food and cash aid to families, in the past week’s negotiations over raising the government’s $31.4 trillion debt ceiling to avoid an economically catastrophic default.

Expanding the work requirements has been a key demand of Republicans, who are also pushing for spending cuts in exchange for their votes to raise the debt limit.

Biden and McCarthy have little time to strike a deal. On Monday, the Treasury Department reiterated its warning that it could run short of money to pay all its bills as soon as June 1, triggering a default that economists say would be likely to spark a sharp economic downturn.

McCarthy, the speaker of the House of Representatives, on Tuesday told reporters that his party, which controls the chamber by a 222-213 margin, would only agree to a deal that cuts spending.

“We can raise the debt ceiling if we limit what we’re going to spend in the future,” McCarthy told reporters.

Both parties agreed on the need for urgent action. Tuesday’s White House meeting, which will include Biden, McCarthy, Democratic Senate Majority Leader Chuck Schumer, top Senate Republican Mitch McConnell and top House Democrat Hakeem Jeffries, is due to begin at 3 p.m. EDT (1900 GMT).

In the past week, staffs for both sides have discussed a range of issues, including spending caps, new work requirements for some benefit programs for low-income Americans and changes to energy permitting in exchange for votes to lift the limit, according to people briefed on the talks.

The sources, who spoke on condition of anonymity to reveal details about closed-door negotiations, said the work requirement discussions focus on the Supplemental Nutrition Assistance Program (SNAP), previously known as food stamps, and the Temporary Assistance for Needy Families program.

Biden alluded to the talks in public remarks over the weekend, saying he would not consider such a move for the Medicaid health program for low-income Americans.

“The president has been clear that he will not accept proposals that take away peoples’ health coverage,” said White House spokesperson Michael Kikukawa. “The president has also been clear that he will not accept policies that push Americans into poverty. He will evaluate whatever proposals Republicans bring to the table based on those principles.”

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A similar 2011 standoff over the debt limit led to a historic downgrade of the U.S. credit rating, sparking a sell-off in stocks and pushing the government’s borrowing costs higher.

The current deadlock has rattled investors, sending the cost of insuring exposure to U.S. government debt to record highs. A Reuters/Ipsos poll completed on Monday found that three-fourths of Americans fear a default would take a heavy toll on families like theirs.

“Nobody should use default as a hostage,” Schumer said in a Senate speech on Tuesday. “The consequences would be devastating for America.”

Some observers have raised concerns that the five-party talks are too unwieldy to make progress.

No. 2 Senate Republican John Thune told reporters the talks appear to have “too many cooks.”

“As we’ve said all along, it is Biden and McCarthy,” Thune said. “So, whoever can actually speak on behalf of the president needs to get in the room, and get McCarthy’s best people in there, and get it done.”

McCarthy himself said he would prefer one-on-one talks with Biden.

“If the president comes to an agreement, the Democrats in the Senate will vote for it. The House will pass it, if we are all in agreement,” McCarthy said. “Why do we waste more time going around and around, not solving any of the real problems? I think you’re putting the country in jeopardy when you do that.”

Adding to the challenge of striking a deal, McCarthy agreed when he became speaker early this year to a House rules change that allows for just one member to call for his ouster as leader, giving greater power to hardliners, including the roughly three dozen members of the House Freedom Caucus.

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